Valero reports increased ethanol production in Q1 results

Valero Energy Corp. has released financial results for the first quarter, reporting net income from continuing operations attributable to Valero stockholders of $964 million, or $1.87 per share, compared to $829 million, or $1.54 per share, for the same quarter of the prior year.

The company’s ethanol segment reported first quarter operating income of $12 million, down from $243 million during the first quarter of last year. The $231 million decrease is primarily attributed to lower gross margin per gallon driven by a decline in gasoline and ethanol prices, which more than offset a decline in corn prices.

Average quarterly ethanol production volumes were 3.8 million gallons per day during the first quarter of this year, an increase of 681,000 gallons per day versus the first quarter of 2014. The increase in production was due to less weather-related rail disruptions in the first quarter of 2015 when compared to the same period of last year, combined with incremental production volumes from the new Mount Vernon plant.

During an investor call, John Locke, executive director of investor relations at Valero, reported that while ethanol margins compressed in the first quarter, they have rebounded some in April. “Longer term, we believe ethanol remains a key component of the transportation fuel mix,” he added. Locke also indicated Valero’s ethanol segment is expected to produce a total of 3.7 million gallons per day during the second quarter.

Valero currently operates 11 ethanol plants with a combined production capacity of 1.3 billion gallons per year.